American workers typically retire around the age of 61 due to various factors like health concerns, layoffs, or simply a desire for rest. However, there’s a growing trend of people working beyond the traditional retirement age. According to the Pew Research Center, around 19% of adults aged 65 or older are still in the workforce, nearly double the percentage from 1987.
American Lena Haas, head of wealth management advice at Edward Jones, notes that many individuals view retirement as a new chapter in life rather than a period of leisure. It’s seen as an opportunity to pursue passions, whether that involves staying in their current job, exploring a second career, or starting a business.
While financial security is a key consideration, there are also significant non-monetary benefits to working later in life. Continuing to work can provide a sense of purpose, mental stimulation, and opportunities for social interaction, all of which contribute to overall well-being. Additionally, studies have shown that staying active in the workforce can help mitigate health issues such as dementia, heart disease, and cancer.
Despite these advantages, there are certain considerations to keep in mind for those considering working past retirement age:
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- Financial Stability: Working later can help preserve retirement savings and allow for additional contributions to retirement accounts, potentially increasing long-term financial security.
- Government Programs: Delaying retirement can also extend eligibility for government programs like Medicare and Social Security, leading to higher benefits in the long run.
- Health Insurance: Staying employed may provide access to employer-sponsored health insurance, reducing out-of-pocket expenses compared to purchasing individual coverage.
- Medicare and Medigap: Careful planning is needed when transitioning from workplace coverage to Medicare to avoid gaps in health insurance and potential penalties for late enrollment in Medicare Part B and Medigap plans.
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- Required Minimum Distributions (RMDs): Individuals aged 73 and older must take RMDs from retirement accounts, although RMDs from current workplace plans can be delayed until retirement.
- Labor Market Dynamics: Older workers may face age discrimination but can also benefit from a tight labor market and evolving workplace policies supporting flexible work arrangements and additional benefits.
- Work-Life Balance: It’s essential to find a balance between work and retirement activities, ensuring time for leisure, hobbies, and family while still pursuing professional goals.
- New workplace benefits support older workersRemote and hybrid work arrangements facilitate improved work-life balance compared to traditional on-site roles. Employers are introducing additional benefits tailored to older workers, such as long-term care insurance post-retirement and caregiving leave. “I recently spoke with a company that offered paid grandparent leave to care for a new grandchild,” shares Roszkowski
9. Working doesn’t have to be a formal job
Exploring consulting, gig work, or entrepreneurship allows you to maintain flexibility and independence while generating income. Volunteering is another option that offers fulfillment and health benefits. “There’s a significant increase in measured happiness for retirees who volunteer. Doing good for others is beneficial for you,” notes Haas from Edward Jones.
10. Find a balance between work and retirement
Prioritize open communication with your spouse or partner regarding work plans to ensure alignment. Allocate ample time for leisure activities, hobbies, and family moments you envisioned during retirement. Avoid overexerting yourself as you navigate your work schedule. “Listen to your body. The goal is for work to enhance your health, not compromise it,” advises Conners, the financial adviser from Arizona.
